09/24/08 prosper update - inconsistent use of words "charge-off"

[Fred93]

In last night's update, they updated the myaccount/lending page to introduce the "charge-off" terminology.  However, all they did was to replace the word "default" with "charge-off".  They did NOT change the calculations.  They still show "4+ months late" loan counts seperately.  Also, the "net charge-offs" under "lending performance" shows only the principal of the defaulted loans, not the "4+ months late" charged-off loans.  Same numbers as before.  Only labels changed.

This is inconsistent with the use of the words "charge-offs" on the performance page, where "charge-off" includes both the "4+ months late" loans and the "default" loans added together.

[DCS]

According to Andrew's blog post, the transition of 4+ lates to "charge off" status will happen over the next month:

This change may not be effective immediately for all severely delinquent loans. In order to roll out this change, for the next 30 days, loans that are 4+ months late that have not already been sold to a debt buyer will continue to be displayed as “4+ months late”. After approximately 30 days, severely delinquent loans will show as a “Charge-off” instead of “4+ months late”. The “4+ months late” status will then be used only in rare circumstances.

http://blog.prosper.com/2008/09/24/site-update-%E2%80%93-september-23-2008/

Other interesting notes from the blog:
* AA borrowers' closing fees increased to 2%
* minimum closing fee increased from $25 to $75
* the term "post-charge off collection agency" is introduced

[pioneer11]

I have one that was sold to JDB showing up now as a charge off.

[Xenon481]

* AA borrowers' closing fees increased to 2%
* minimum closing fee increased from $25 to $75

Wow.  I definitely will never take a loan from Prosper now.

[bamalucky]

Once in charge-off:
• The loan cannot return to “Current”. It will remain a “Charge-off”, even if the borrower pays the full balance of the loan

[Senator]

FWIW I have one loan where the BK was discharged on 8/21 STILL showing in 4+ month late.

ETA It's "Loan Balance" is still included in my "Total account value".

[112233]

does prosper have their default rate in any of their recent advertisements?

[dliebs97]

FWIW I have one loan where the BK was discharged on 8/21 STILL showing in 4+ month late.

ETA It's "Loan Balance" is still included in my "Total account value".

I have one that was discharged on 8/5 that is also still there, I sent prosper an email about it with no response

on another point 2% for AA or $75 minimum, they clearly are hoping to increase revenue but what AA would pay 2% for origination and then 7 or 8% interest on a loan

[bamalucky]

but what AA would pay 2% for origination and then 7 or 8%

A scorex lottery winner.

[animalhouse]

I am so confused.  Prosper moved one of my loans to Charge off.  Loan number is 12577, which is part of the group Prosper is suing.  When I click on the Loan Detail tab, I see the following

This loan has been charged-off with no value
This loan has been charged-off completely, and your loan balance has been reduced to $0.00. There is no possibility of receiving any further recoveries on this loan.  

OK, for this loan since I did not opt out, in theory, I could receive some money on this loan.  I understand that because this is one of the test groups, why the statement is there.  What I don't understand is what about my other +4 loans, are they stating they are not doing any kind of collection activities on them?  If this is the case, I want all my +4 loan sold, even if it is only for 3 cents on the dollar, which is better then zero cents.

[Senator]

Maybe they're saying that any funds recovered by suing deadbeat borrowers are going to lawyer fees.

[xraider]

AnimalHouse, I'd definitely ask Prosper about that.

I'm kinda wondering who this post charge off collection agency is!  Very strange stuff here.

[Mtnchick]

So they really didn't do anything but give us access to accounts that were previously banished from our lending page? Big whoop.

Then I have accounts like this where they filed Chapter 13 a year ago but I've never gotten a dime in payments:

Collection activity on this loan has been suspended due to Chapter 13 bankruptcy filing by the borrower on Oct-04-2007. Read Prosper's bankruptcy policy.

http://www.prosper.com/lend/listing.aspx?listingID=98026

That's just one example........

[Shenandoah]

but what AA would pay 2% for origination and then 7 or 8% interest on a loan

Prosper has consistently demonstrated that their target audience is desperate borrowers with nowhere else to go.

[ira01]

* AA borrowers' closing fees increased to 2%
* minimum closing fee increased from $25 to $75

Wow.  I definitely will never take a loan from Prosper now.

This move does seem to show despration on Prosper's part to increase revenues.  I wonder if the VC have given them a final warning that if revenues don't come up substantially, the plug is going to be pulled?  Of course, I think it is counterproductive, because it will discourage borrowers.  A 2% origination fee for a AA borrower, coupled with current interest rates, makes the loan attractive only to people who shouldn't really be AA at all.  And the new minimum closing fee will eliminate a lot of small loans, I think, since otherwise it makes the origination fee on a $1K loan, for example, a whopping 7.5%!